UPDATE 1-Rio Olympics fails to boost Brazil services in August

BRASILIA Oct 19 (Reuters) - Services activity in Brazil
fell more than expected in August as the Rio Olympics failed to
boost growth in the country, adding to recent signs that the
economy could take longer than expected to emerge from
recession.

Services activity in Brazil shrank 3.9 percent in August
from August 2015, statistics agency IBGE said on
Wednesday. Economists had forecast a median drop of 2.7 percent
in a Reuters poll.

Services activity fell 1.6 percent from July after seasonal
adjustments, erasing a 0.7-percent gain in the previous month.

Services grew 2.7 percent from July in Rio de Janeiro, the
host city of the 2016 Olympics. However, tourism fell 0.8
percent in the country as a whole, and a broad category of
services targeted at families, which includes restaurants,
dropped 1.6 percent, IBGE said.

Taken together with a second consecutive drop in retail
sales and a sharp plunge in industrial output in August, the
weakness in Brazil's services suggests a two-year-long recession
continued to hold course in Latin America's largest economy
despite a recent improvement in business and consumer
confidence.

Services account for about 60 percent of Brazil's gross
domestic product. Economists in a global Reuters poll on Tuesday
projected Brazil's economy to resume growth on a year-on-year
basis only in the first quarter of 2017.

Economists with MCM Consultores forecast services activity
to fall for a second straight month in September, although at a
smaller rate of 0.2 percent, they said in a note.
(Reporting by Silvio Cascione; Editing by Chizu Nomiyama)